Microsoft Exec Hints at iPhone Rival

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NEW YORK -- An executive in Microsoft's entertainment and games division today hinted that Microsoft may be developing its own rival to Apple's iPhone, based on Windows Mobile OS.

Speaking at Citi's annual Global Technology Conference in New York on Tuesday, Mindy Mount, corporate vice president and CFO for Microsoft's Entertainment and Devices Division, said it's not "unreasonable" to think that Microsoft will integrate photo, music and touchscreen features into a Windows Mobile product in the future, though she declined to comment on the specifics of when or what that might look like.

Microsoft's idea with Windows Mobile has been to move every-day business capabilities, such as accessing e-mail, from the PC to the mobile device. However, most people "tend to have one phone for personal as well as work [use]," Mount said. "Being able to do pictures and music is something that consumers are going to want, so it's a natural thing for us to want in our product roadmap."

Zune on Steroids?

Microsoft is rumored to be evolving its Zune multimedia player -- its rival to the iPod -- with new features out by the holiday time at the end of the year, though Mount declined to confirm this today. But a hybrid product melding Zune, which so far has had lackluster response from consumers, with Windows Mobile features is not completely unrealistic for the future.

Microsoft has already worked with hardware partners to develop Windows Mobile handsets with touchscreen capabilities that are similar to the iPhone's. For example, the HTC Touch from High Tech Computer is one of the latest Windows Mobile devices to offer users the ability to use a touchscreen to scroll through e-mail and contacts and browse Web pages.

But the HTC Touch smartphone, which is available in the U.K., Europe and Asia and should makes its North American debut later this year, doesn't have the type of multimedia capabilities that give the iPhone an edge over rival smartphones, at least in the short term. Market research firm iSuppli said Tuesday that in July, its first full month of release, the iPhone outsold popular competitors such as the Research in Motion Blackberry and Palm Treo devices.

Regarding RIM, comments Mount made Tuesday also seemed to shoot down speculation last week that Microsoft is in talks to purchase the Canadian maker of mobile hardware and software. "We don't comment on rumors, but what I would ask people is, what that really gets you," she said.

Much of RIM's success has been with the device portion of its BlackBerry business, whereas Microsoft has been very successful with using third parties to build its Windows Mobile devices, Mount said. The company sold 11 million Windows Mobile licenses last year, and expects to do 20 million in the current fiscal year. "We're pretty happy with that roadmap right now," she said.

That roadmap so far does not include Microsoft offering hardware for its Windows Mobile OS, which also means if the company did release an iPhone rival based on Windows Mobile, it's unclear whether it would be through a third party or from the company itself. Still, if the Xbox 360, Zune and Milan table-top computer with touchscreen features the company previewed earlier this year are any indication, Microsoft seems to be warming up to the idea of offering consumer hardware devices alongside its traditional software, so an iPhone rival from the vendor is within the realm of possibility.

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